The truth about Canwest’s collapse

By Steve Maich - Wednesday, October 14, 2009 at 12:40 PM - 1 Comment

There are certain archetypical characters that come up again and again as we rush to scribble out the first draft of history. In business, the roles are particularly well-worn: the iconoclastic entrepreneur, the maverick gambler, the sage manager, the disruptive outsider, the establishment man, and, of course, the dilettante heir. We organize these characters into familiar storylines—the heroic rise, the humiliating fall, the tragic miscalculation—again and again, not just to elevate the mundane details of commerce into dramatic narratives, but because these storylines serve a purpose. People are good or bad, smart or stupid, and everything makes sense.

We never tire of these familiar fables because they impose a tidy order on the chaotic events of life. They reinforce certain ideas that make the world seem less arbitrary, less random, and less frightening. Triumphs are always the result of human genius, and failures are generally flaws of character written in our DNA. Everybody deserves their fate. Continue…

The soaring cost of Asper’s dream

By Jonathon Gatehouse - Thursday, June 11, 2009 at 12:00 PM - 12 Comments

The country’s newest national museum is deep in the hole, before digging for its foundation has even been completed. Work on the Canadian Museum for Human Rights, in downtown Winnipeg, only began in early April, but the building is already $45 million over budget. When Ottawa agreed in April 2007 to take over the private project—the dream of the late Izzy Asper, founder of Canwest Global Communications—construction costs for Antoine Predock’s soaring, glass castle design had been estimated at $165 million—not including exhibits or the interior. But a combination of inflation, a fluctuating dollar, and the price of importing glass and steel for its unique structure, has since seen costs rise by 27 per cent. “The bulk of this is inflation,” says Patrick O’Reilly, the museum’s chief operating officer. “We hear a lot about the economic downturn, but it has not affected construction costs in Western Canada.”

The museum’s board of trustees, appointed by the Conservative government last August, considered scrapping the landmark design, but ultimately decided the savings would be negated by the costs of replacement plans and construction delays. Instead, they have trimmed $12.6 million from the budget by modifying electrical and ventilation systems, reducing the protective coating on concrete floors and opting for less costly stone for its walls. And they have launched a renewed fundraising push—and an appeal to all levels of government—to try to make up the shortfall. “We’re hoping that current donors will increase their gifts,” says O’Reilly. The City of Winnipeg has so far given $20 million to the project. Manitoba has pledged $40 million, and Ottawa $100 million, as well as $21.7 million in annual operating funds. Premier Gary Doer said last week that his government might be willing to dig a little deeper, if the private sector takes the lead. (The separate fundraising arm “Friends of the CMHR” has so far collected $105 million.) But Heritage Minister James Moore says no additional federal money will be forthcoming. Perhaps an indication that the Tories feel they have done enough for Asper-backed causes, with tax dollars already committed to a new football stadium for the soon-to-be family-owned Blue Bombers, and a bailout of private television broadcasters including Canwest’s Global and E! channels reportedly in the works.

Continue…

The last days of a dynasty

By Peter C. Newman - Thursday, April 30, 2009 at 9:00 AM - 5 Comments

In the fall of 1999, Izzy Asper—Canwest’s founder, animating spirit and autocratic warlord—finally surrendered official command to his younger son, Leonard (while staying on as executive chairman). His 35-year-old heir hosted a private family dinner to celebrate the occasion. “What will this mean for me?” the freshly minted president and CEO asked, looking around the table, then answered his own question: “Nothing,” he said. “I will always get in the last words, ‘Yes. Dad. No. Dad. Right away, Dad.’ ”

Nearly a decade later, as the world has turned into an economic killing field, Leonard misses the affirming echo of his father, who had a million miles on his meter and seemed capable of handling any emergency. Izzy died in 2003 but his last deal, the purchase by Canwest Global Communications Corp. of Conrad Black’s newspaper chain, buried the Winnipeg-based company in a catacomb of debt—$4.1 billion—from which it never emerged. That debt, added to later financial obligations, has dragged the entire media empire to the very brink of insolvency. As Maclean’s went to press late Tuesday night, Canwest was still locked in negotiations with its lenders, searching for some way to restructure, without tearing the company apart.

Continue…

Family ties

By Jonathon Gatehouse - Saturday, March 21, 2009 at 1:28 AM - 17 Comments

A potential federal bailout for private television broadcasters is about to come under scrutiny before a parliamentary committee. Starting March 25, the House of Commons standing committee on Canadian heritage will launch a series of hearings into the television industry’s current economic crisis. But the opposition is serving notice that it intends to find out why the Harper government seems intent on helping private companies like CTV and Canwest Global, while leaving the publicly-owned CBC to fend for itself.

“We want to make sure that (Heritage Minister) James Moore isn’t making a sweetheart deal with a bunch of lobbyists who are close to the Prime Minister,” says Charlie Angus, the NDP’s heritage critic. Earlier this week, the Canadian Press reported that Stephen Harper has recently met with both Canwest CEO Leonard Asper, and Pierre-Karl Peladeau, head of Quebecor, owners of the French language TVA network, to discuss the broadcasters’ concerns. Moore has indicated that the government is looking at regulatory changes and tax breaks to aid the networks—most specifically Canwest which is teetering on the edge of bankruptcy—but says no specific commitments have been made.

Witness lists for the hearings are still being drawn up, but the first to be heard from will be Konrad von Finckenstein, chair of the Canadian Radio-television Telecommunications Commission (CRTC.) Private broadcasters have long been after the CRTC to treat their conventional channels more like specialty networks, which receive a share of cable subscribers’ monthly bills known as carriage fees. Cable providers like Rogers, which owns Maclean’s, are opposed to the idea, claiming the system could inflate customers’ bills by as much as $10 a month.

One opposition concern is the close relationship between Canwest’s owners, the Asper family, and the ruling Conservative Party. The media company’s newspapers have endorsed Harper in the past two federal elections, reflecting a shift in the family’s political allegiances. Izzy Asper, the company’s late founder was a former leader of the Manitoba Liberal Party and a lifelong Grit partisan. In 2003, the year he died, the company donated almost $54,000 to the Liberals, more than double the $25,000 it gave the then Canadian Reform Conservative Alliance. But Asper’s children—Len, David, and Gail—have broken with the faith. Especially since dithering by former Liberal Finance minister Ralph Goodale on tax changes for income trusts shaved an estimated $150 million off the value of a 2005 Canwest newspaper trust offering. In 2007, for example, Len, David, and Ruth, their mother, all donated $1,000 each to the Tories, close to the new maximum. So did Gail, although she also gave $500 to the Green Party and $1,100 to the Liberals.

And since Stephen Harper took power in Jan 2006, his government has been supportive of some of the Aspers other endeavours. The Tories not only carried through with Liberal pledges to fund Izzy’s dream of a Canadian Museum of Human Rights in Winnipeg, but substantially upped the ante. In addition to $100 million towards construction costs, Ottawa has designated the project a “national museum”—the first-ever outside the National Capital Region—and pledged a further $21.7 million a year in operating funds, in perpetuity. (The Asper Family Foundation have pledged $20 million to the project—the third $4 million installment is due later this month—and Gail has been instrumental in raising a further $85 million for public and corporate donors.)

This past December, Treasury Board Minister Vic Toews, indicated that Ottawa is ready to give a further $15 million to another family obsession—a new stadium for the Winnipeg Blue Bombers. Under the proposed plan, the private sector will pony up $100 million of the $150 million estimated cost of the new 30,000 seat facility at the University of Manitoba. And David will take control of the now civically-owned franchise.

Another hot topic at the hearings will be the lack of government interest in bailing out the CBC. The sudden drop off in advertising has left the public broadcaster with a $100 million hole in its budget. But its pleas for an advance on next year’s funding, or other financial assistance, have been greeted with a collective Tory shrug. The NDP’s Angus questions why James Moore seems so willing to help one part of the industry, and so disinterested in the plight of another. “He’s basically hanging the CBC out to dry, going as far as to ridicule its request for bridge financing,” he charges.

But the bottom line for opposition parties will be getting the government and networks to live up to existing commitments regarding local broadcasting and Canadian content. And there they might find at least some common ground. Indeed the sudden Conservative interest in a bailout has followed on the heels of CTV’s announcement that it will close three underperforming stations—two in Ontario and one in Manitoba. And similar noises from Canwest that the same fate awaits its 5 E! channels unless a buyer can quickly be found. Coupled with the networks cuts to local newscasts, the trend bodes ill for the Tories’ favoured strategy of going “over the head” of the press gallery in Ottawa, and flogging its policies through interviews with local media.

“It wasn’t local broadcasting or Canadian content that brought us into this mess,” says Angus. “And things shouldn’t be balanced on its back.”

—with Philippe Gohier